Balanced Investing for a Balanced Life

[Rick Ferri]

Here is a simple article about how people benefited by staying the coarse with a balanced portfolio during the financial crisis.

A Balanced Portfolio for a Balanced Life

Enjoy! (then pass it on).

Rick Ferri

[RadAudit]

Thanks for the link.

[Grt2bOutdoors]

Here is a simple article about how people benefited by staying the coarse with a balanced portfolio during the financial crisis.

A Balanced Portfolio for a Balanced Life

Enjoy! (then pass it on).

Rick Ferri

Was it that "rough" of a ride, Rick?

[Rick Ferri]

Nah. I sleep fine all the way through the crisis with 80% in equity. Did you?

Rick Ferri

[Grt2bOutdoors]

Yep - I stayed the course at 70% equity, following the plan.

[Rick Ferri]

I feel for people who capitulated during the crisis because they were hurt going both ways. First, they lost money by selling, and then they lost money by not buying.

One method I used to stop people from panic selling was to suggest a 10% decrease in their equity allocation. This made them think, "Am I really going to do this?" Most people who I put this recommendation to decided to leave their portfolio alone. They just wanted to know they had the ability to do something. There were a few people who lowered their allocation, which wasn't hard to do because the portfolio was already at the new allocation. We just didn't do a rebalancing. This had a soothing Affect. We didn't hear from them for the rest of the crisis.

And then there were the people who didn't call us. Instead, they sold everything out on their own in a panic. When we called them to find out what happened to their account (it didn't show on our download from the custodian), they said they just couldn't take it anymore and had to do something right then and there. I wish they would have called us before pulling the plug. But there was nothing we could do at that point. They were burnt toast - burnt on the way down and burnt on the way up.

Rick Ferri

[dharrythomas]

Rick,

Thanks as always for the article. I read many more than I respond to.

Harry

[livesoft]

I would guess that fewer than 5% of investors "capitulated" during the crisis. Does anybody have any valid statistics for such behavior?

[Grt2bOutdoors]

I would guess that fewer than 5% of investors "capitulated" during the crisis. Does anybody have any valid statistics for such behavior?

Then I must know all 5% because I can't tell you how many phone calls I got from friends and relatives saying they were protecting what ever was left by bailing (that is the pc version of it).
Selling and going to cash - not rebalancing or reallocating into bond - cash!